In addition to health care reform, there's lots going on in the employee benefits world. Introducing the third annual ABC's of employee benefits:
* Accountability is working. Whether in health and welfare or wellness, employers are holding employees accountable for good health more than ever. According to the 2013 Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care, average total health care costs per active employee are only expected to increase 5.1% in 2013, the lowest increase in 15 years.
* Barrage of regulations. Since President Obama was re-elected, there have been a significant number of health care reform regulations released, including rules on health insurance exchanges and the 90-day waiting period. Using a good compliance resource can help you understand what all the regulations mean for your organization.
* Consider outsourcing your benefits administration. It's not for everyone, but think about the time you could commit to things like developing strategy to manage the costs associated with the new complex world of employee benefits, including the impact of health care reform. (For more on outsourcing benefits administration, read "Aloha to outsourcing," in EBN April 1.)
* Don't forget the Family and Medical Leave Act. With the focus so much on health insurance, there is a chance you may not have seen the new 2013 FMLA requirements, including new forms and notice-posting requirements. Also, don't forget about state-law compliance.
* Ensure you have good help. Between new employee benefits compliance requirements, reduced staffs and internal cost pressures, odds are you're moving a mile a minute. That said, make sure you not only have the proper internal resources but a broker/consultant capable of following, understanding and helping you in both the short term (implementing the requirements) and long term (developing strategies for the future).
* Flexibility in work arrangements. According to a SHRM Research Spotlight on Future HR Challenges and Talent Management Tactics, 40% of respondents feel that providing flexible work arrangements will be most effective in attracting, retaining and rewarding the best employees over the next 10 years.
* Grandfathered plans decreasing. Not surprisingly, the number of companies with at least one grandfathered medical plan decreased to 58% in 2012, from 72% in 2011, according to the Kaiser Family Foundation/Health Research & Educational Trust 2012 Annual Employer Health Benefits Survey.
* Health care costs. Health care costs will continue to grow faster than the economy, despite the cost-control measures within the Patient Protection and Affordable Care Act. Federal health care spending will increase the deficit by an average of $827 billion per year over the next 75 years, says a report from the U.S. Government Accountability Office. Why? Technological advancements, growth in personal income, expanded insurance coverage and demographic changes - all beyond the cost-control provisions of the ACA.
* Importance of benefits to employees. According to MetLife's 11th Annual Study of Employee Benefit Trends, three out of five employees who would recommend their employer as a good place to work say benefits are an important reason they remain with the company.
* Justify resources now. Given the complex benefits requirements your organization will face over the next few years, there's a good chance you'll need external support in the form of legal counsel, consultants, actuaries, financial analysts and communications specialists. Review where you might need such assistance now so you can prepare and present a business case justifying your needs before every situation becomes an unbudgeted, last-minute exercise.
* Keep senior management informed. Ensure that senior management is not only aware of the 2013 and 2014 health care reform provisions but also the expected financial impact of such provisions. This will assist with proper budgeting and staffing, plus minimize the surprise factor when it's time to implement each provision (like next year's $63 reinsurance fee).
* Losing grandfathered status. Because 2010 seems like a lifetime ago, just a reminder that if one of your medical plans loses grandfathered status, you must implement the health care reform provisions associated with being a nongrandfathered plan.
* Manage health care costs. In a 2012 survey of finance executives by Prudential Financial, Inc. and CFO Research Services, 70% of respondents said controlling the employer cost for company-provided health care benefits was the top priority. Part of the solution will be for employees to bear a larger share of the costs.
* Nondiscrimination provision for fully insured, nongrandfathered plans under PPACA seems to be ...
* ... Out of sight, out of mind. We are still waiting for federal guidance on the requirement.
* PTO plans gain popularity. According to SHRM's 2012 Employee Benefits Survey, 51% of the survey participants offer a PTO time-off program, up from 42% in 2009.
* Quantify your costs. Your annual health insurance premium renewal is not just based on trend, experience and plan design anymore; it's about trend, experience, plan design and the financial impact of the health care reform provisions of that year. That said, in order to get a basic understanding of the future costs that will affect your organization, it's important that you financially model your health insurance costs through at least 2018.
* Retirement readiness. The 23rd annual EBRI Retirement Confidence Survey shows that Americans' confidence in their ability to afford a comfortable retirement remains low - 49% are not too confident or not at all confident. (See a related story on p. 20 about the EBRI data.) You may want to check the pulse of your population and see what opportunities are available through your 401(k) and EAP providers to assist.
* State of retiree health coverage. According to an EBRI survey on the state of retiree health benefits, 64% of companies offering retiree health benefits say they are somewhat or very likely to increase the retirees' portion of the premiums in 2013, and 53% said they are somewhat or very likely to increase cost sharing to retirees in 2013.
* Top-notch employee communications. Given the complexities of the health care reform provisions, coupled with the fact that 42% of respondents to a February 2013 Kaiser Health Tracking Poll have an unfavorable view of PPACA, it will be especially important (and challenging) to communicate effectively to employees.
* Understand this Very important PPACA provision. Starting in 2014, PPACA will impose a new tax on health insurance that is expected to exceed $100 billion over the next 10 years, according to the Joint Commission on Taxation. According to a 2011 report by Oliver Wyman, this tax will increase premiums in the insured market from between 1.9% and 3.7% over the next few years. If you offer a fully insured plan, you'll want to better understand how this will affect your health insurance plan, and certainly make senior management aware.
* Wellness accountability. According to SHRM's 2012 Employee Benefits Survey, over the past five years, benefits that reward employees for improving their health have increased. The percentage of employers offering health and lifestyle coaching jumped from 33% in 2008 to 45% in 2012, and rewards/bonuses for participating in a health and wellness program increased from 23% in 2008 to 35% in 2012.
* X-amine "play or pay." Even if you're planning to continue to offer medical insurance to employees in 2014, don't forget that such insurance must be deemed affordable or else you will face a penalty. As such, perform an affordability analysis.
* Your well-being. The complexities and pace of today's benefits environment can take a major toll on the best benefits professionals. Don't forget to stop and take a deep breath periodically.
* Zero in on exchanges. In just a few months, the exchanges are expected to open to the public and small businesses. There is so much to think about in the upcoming years: play or pay and plan affordability; how you want to communicate the exchange opportunity to employees; whether you want to use a SHOP exchange to purchase insurance for your employees; and reviewing the value of offering employee coverage through a private exchange.
Contributing Editor Ed Bray, J.D., is director of employee benefits for a major transportation company in Hawaii.
